Stochastic Maps, Wealth Distribution in Random Asset Exchange Models and the Marginal Utility of Relative Wealth
We look at how asset exchange models can be mapped to random iterated function systems (IFS) giving new insights into the dynamics of wealth accumulation in such models. In particular, we focus on the "yard-sale" (winner gets a random fraction of the poorer players wealth) and the "theft-and-fraud" (winner gets a random fraction of the loser's wealth) asset exchange models. Several special cases including 2-player and 3-player versions of these `games' allow us to connect the results with observed features in real economies, e.g., lock-in (positive feedback), etc. We then implement the realistic notion that a richer agent is less likely to be aggressive when bargaining over a small amount with a poorer player. When this simple feature is added to the yard-sale model, in addition to the accumulation of the total wealth by a single agent ("condensation"), we can see exponential and power-law distributions of wealth. Simulation results suggest that the power-law distribution occurs at the cross-over of the system from exponential phase to the condensate phase.
When requesting a correction, please mention this item's handle: RePEc:arx:papers:cond-mat/0304324. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.